Yes, It’s Possible: This Is How China Can Boost US Imports By $200 Billion

Yes, It’s Possible: This Is How China Can Boost US Imports By $200 Billion

Almost one month ago we showed in one chart why the core concession in the Phase One trade deal by China – namely the promise for a “best effort” to purchase $40 billion in agricultural products from the US – appeared impossible. In short, assuming a similar export mix as in 2017, this would translate into an unprecedented 235% volumetric increase in 2020 US agricultural exports to China over 2019. The problem is that while US exports to China had declined sharply in 2018, other nations stepped in, in many cases with long-term bilateral contracts in place ensuring the long-term delivery of ag products from mostly Latin American substitute markets. This, as Goldman points out, means that such an increase in Chinese purchases from the US “would likely be hugely disruptive to global agriculture markets, primarily crowding out Argentine and Brazilian supplies that have taken substantial market share since 2017 due to the trade war and much weaker currencies.